Rutz v. Discover Financial Services
Filing
34
ORDER granting 27 Motion to Dismiss; denying 29 Motion for Reconsideration ; denying 31 Motion for Summary Judgment; denying 32 Motion to Amend/Correct; finding as moot 33 Motion for Extension of Time to File Response/Reply. Signed by Honorable Jimm Larry Hendren on September 25, 2012. (jn)
IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF ARKANSAS
FAYETTEVILLE DIVISION
ROBERT L. RUTZ
v.
PLAINTIFF
Civil No. 12-5024
DISCOVER FINANCIAL SERVICES;
NATIONAL ARBITRATION FORUM, INC.;
NATIONAL ARBITRATION FORUM, LLC;
DISPUTE MANAGEMENT SERVICES, LLC
(d/b/a FORTHRIGHT);
ACCRETIVE, LLC; and AGORA
DEFENDANTS
O R D E R
Now on this 25th day of September, 2012, comes on for
consideration the following motions:
*
Defendant Discover Financial Services' Motion to Dismiss
Plaintiff's Second and Third Amended Complaints [document #27
filed August 1, 2012 -- (D#27 Motion)];
*
plaintiff's Motion to Reconsider Order [26] Granting
Motion to Dismiss for Failure to State a Claim [10] [document #29
filed August 20, 2012 -- (P#29 Motion)];
*
plaintiff's Motion for Summary Judgment [document #31
filed September 12, 2012 -- (P#31 Motion)];
*
plaintiff's Motion to Amend Complaint by Naming and
Serving Does 6–15 [document #32 filed September 21, 2012 -- (P#32
Motion)]; and
*
Defendant
Discover
Financial
Services'
Motion
for
Extension of Time to Respond to Plaintiff's Summary Judgment
Motion [document #33 filed September 24, 2012 -- (D#33 Motion)].
The Court has considered the said motions and, being well and
sufficiently advised, finds and orders as follows with respect to
them:
1.
Plaintiff, Robert L. Rutz, acting pro se, filed this
action against Discover Financial Services on February 7, 2012,
alleging
reverse
domain-name
hijacking
under
15
U.S.C.
§ 1114(2)(D)(v).
Plaintiff's initial complaint was amended on April 16, 2012
(First
Amended
Complaint),
to
include
additional
background
information.
The initial complaint was further amended on July 18, 2012
(Second and Third Amended Complaints), to allege:
*
breach of contract and "tortious selective
enforcement" against Discover; and
*
violations of the Racketeer Influenced and Corrupt
Organizations Act
(RICO)
against
Discover
and
five
additional defendants.
In filing his amended complaints, Mr. Rutz invoked Local Rule
5.5(e) -- explaining that the amendments were intended to be
continuations
of
his
original
complaint
and
that
all
prior
pleadings were incorporated.
2.
On
March
22,
2012,
Discover
moved
to
dismiss
the
original complaint for failure to state a claim on which relief
-2-
could be granted -- and Discover's arguments for dismissal were
later applied to the First Amended Complaint, as well.
In its July 18, 2012, Order (document #26), the Court granted
Discover's motion to dismiss the claims in the original and First
Amended Complaints -- thereby leaving only the RICO, breach-ofcontract,
and
"tortious
selective
enforcement"
of
background,
claims
to
be
turns
to
litigated.
In
light
that
the
Court
now
discussions of the various motions mentioned.
3.
Pursuant to Fed. R. Civ. P. 8(a), a complaint must
contain, among other things, a short and plain statement of the
claim showing that the complainant is entitled to relief. To
survive a motion to dismiss for failure to state a claim, a
complaint must contain sufficient facts stating a claim that is
plausible
reasonable
on
its
face
inference
and
that
will
the
allow
a
defendant
court
is
to
liable
draw
the
for
the
misconduct alleged. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
For purposes of deciding the motion, the Court takes the alleged
facts as true, construing all reasonable inferences arising from
the complaint in the light most favorable to the plaintiff. Morton
v. Becker, 793 F.2d 185, 187 (8th Cir. 1986). A complaint should
not be dismissed for failure to state a claim unless it appears
beyond doubt that the plaintiff can prove no set of facts that
would entitle him to relief. Levy v. Ohl, 477 F.3d 988, 991 (8th
-3-
Cir. 2007).
4.
Plaintiff's Second and Third Amended Complaints purport
to set forth several claims which may be identified and discussed
as follows:
*
RICO Claims;
*
Breach of Contract Claim; and
*
"Tortious Selective Enforcement" Claim.
Each of these claims will be discussed in turn with respect
to Defendant's said D#27 Motion.
(a)
unlawful
RICO Claims -- Applicable law provides that it is
for
any
person,
through
a
pattern
of
racketeering
activity -- or through collection of an unlawful debt -- to
acquire or maintain any interest in or control of an enterprise
which is engaged in, or the activities of which affect, interstate
or foreign commerce. 18 U.S.C. § 1962(c). And, likewise, it is
unlawful for any person to conspire to violate the provisions of
this section. 18 U.S.C. § 1962(d). Mr. Rutz has alleged violations
under both of these subsections.
(1)
In
his
Second
Amended
Complaint,
Mr.
Rutz
incorporates paragraphs 85–94 of his first Amended Complaint
(document #14), which state that the defendants have operated and
managed
a
legal
entity
enterprise,
or
alternatively,
an
association-in-fact enterprise, to obtain money and property from
"Plaintiff"
through
a
pattern
-4-
of
mail
and
wire
fraud
--
specifically by engaging in "improper arbitration practices." Mr.
Rutz further incorporates paragraphs 96–98, which state that "the
defendants" conspired to commit these RICO violations.
(2) The first Amended Complaint, as incorporated by the
Second Amended Complaint, states the following with respect to
RICO:
*
that the National Arbitration Forum issued a series of
public statements touting its impartiality (document #14,
paragraph 29);
*
that the National Arbitration Forum, Inc. (NAF, Inc.),
National Arbitration Forum, LLC (NAF, LLC), and Dispute
Management
Services,
LLC
d/b/a
Forthright
(Forthright)
assisted the "Creditor Defendants"1 in drafting arbitration
clauses for inclusion in consumer contracts and in drafting
actual claims against consumers (document #14, paragraph 91);
*
that the "Creditor Defendants" directed NAF, Inc., NAF,
LLC, and Forthright to employ specific arbitrators and to
render specific decisions in the "Creditor Defendants'" favor
(document #14, paragraph 92);
*
that the
"Creditor
Defendants"
sent
to
arbitrators
judgment forms that were already filled out, so that all that
1
This section of the first Amended Complaint is a reproduction of a complaint in
an unrelated Minnesota case, Michael Kroll v. National Arbitration Forum, Inc., et al.,
which involved several of the same parties. The "Creditor Defendants" include American
Express, Bank of America, MBNA Corporation, Wells Fargo, Wachovia, Capital One Financial
Corporation, Capital One Bank (USA), N.A., Capital One, N.A., J.P. Morgan Chase,
Citigroup, and Discover Card (document #14, paragraph 22).
-5-
needed to be done was check a box and sign one's name
(document #14, paragraph 92(1));
*
that the "Creditor Defendants" called arbitrators and
instructed them to change adverse decisions (document #14,
paragraph 92(2));
*
that the "Creditor Defendants" prohibited "the Forum"
from employing arbitrators who ruled adversely to the
"Creditor Defendants" (document #14, paragraph 92(3)); and
*
that the "Creditor Defendants" drafted claim forms and
fictitious affidavits of service, including the placement of
stored electronic signatures on documents (document #14,
paragraph 92(4)).
The pleading further states
*
that "the misstatements described in the allegations set
forth above" were sent through wire communications, including
the Internet;
*
that the defendants mailed "sham arbitration clauses" in
contracts that were materially false and misleading; and
*
that all arbitration documents, including those used in
"Plaintiff's" arbitration, were sent through the U.S. mail or
via the wires on the Internet or otherwise (document #14,
paragraph 93).
It then states that the misconduct was carried out between 2007
and 2009, when the National Arbitration Forum ceased handling
-6-
consumer arbitrations (document #14, paragraph 94).
(3)
As the basis for its motion to dismiss the RICO
claims, Discover argues that Mr. Rutz has failed to plead and
prove a pattern of racketeering activity.
It contends that
"racketeering activity" is defined in 18 U.S.C. § 1961(1), which
sets
out
an
exclusive
list
of
crimes
that
may
constitute
racketeering activity -- none of which relate to domain-name
disputes or arbitration proceedings. Thus, Discover contends that
Mr. Rutz has not alleged a predicate act racketeering crime.
Discover further argues that the complaint lacks sufficient
particularity of the "who, what, when, where, and how" to satisfy
the pleading requirements.
(4)
Because
Mr.
Rutz's
pleadings
have
been
filed
piecemeal (with certain sections offered initially as "examples"
that are later incorporated by amended pleadings), it is difficult
to pinpoint the substance of his RICO claims.
(5)
Much of what Mr. Rutz has incorporated into his
Second and Third Amended Complaints is inapplicable to this case
since
it
relates
to
credit-card
debt
arbitrations
conducted
between 2007 and 2009. As best the Court can determine, Mr. Rutz's
experience with the National Arbitration Forum occurred between
December 2011 and January 2012 -- and the dispute involved domainname registration.
(6) It appears to the Court that Mr. Rutz has attempted
-7-
to adopt the claims made in the complaint involved in the case of
Kroll
v.
National
Arbitration
Forum,
Inc.
--
by
simply
substituting is name for that of Michael Kroll and then attempting
to apply Kroll's arguments to his own situation in this case.
Such an effort is inappropriate in federal court pleading
practice.
While it might well be that the Kroll complaint
contains facts sufficient to plead a RICO violation as to Michael
Kroll and his consumer-debt dispute, it does not properly plead a
RICO violation as to Mr. Rutz and his domain-name dispute with
Discover.
As
so
drafted,
Mr.
Rutz's pleadings
--
when
read
together as Local Rule 5.5(e) permits the Court to do -- fail to
explain
what
against
him
racketeering
or
how
the
crime
Discover
misconduct
allegedly
established
a
committed
pattern of
racketeering activity.
The Court, therefore, concludes that the Second and Third
Amended Complaints fail to state a civil RICO claim against
Discover upon which relief may be granted -- and Discover's motion
to dismiss (D#27 Motion) will be granted on that allegation.
(b)
Breach of Contract Claim -- The Court next considers Mr.
Rutz's contention that Discover knowingly enabled a breach of
contract by the domain-name registrar GoDaddy.com. The elements of
tortious interference with a contractual relationship are
*
the existence of a valid contractual relationship;
*
knowledge of the relationship on the part of the
-8-
interfering party;
*
intentional interference inducing or causing a breach of
the contract; and
*
resultant damage to the party whose relationship has
been disrupted.
Dodson v. Allstate Ins. Co., 345 Ark. 430, 444, 47 S.W.3d 866, 875
(2001).
(1)
Discover argues that Mr. Rutz has failed to plead
any facts supporting his allegation that Discover induced a
breach. Mr. Rutz argues to the contrary.
(2) In Section P. of the Second Amended Complaint
(document #20, pages 79–80), Mr. Rutz states that, although his
contract
with
GoDaddy.com
obligated
him
to
submit
to
an
arbitration, the procedure that took place before the National
Arbitration Forum was not an arbitration. He further alleges that
Discover "knowingly enabled this Breach of Contract."
Mr. Rutz goes on to argue that the ten days allowed for
filing a response in federal court to the arbitrator's decision is
unconscionable because it creates "'cruel and unusual' strain,
stress, and life-disrupting results" for the person filing the
response.
Other than the bare assertions that no arbitration took place
and that Discover was to blame for that breach, Mr. Rutz has not
stated any facts to support a claim of breach of contract or
-9-
tortious interference.
The Court, therefore, concludes that the Second and Third
Amended Complaints fail to state a breach of contract claim
against
Discover
upon
which
relief
may
be
granted
--
and
Discover's motion to dismiss (D#27 Motion) will be granted on that
allegation.
"Tortious Selective Enforcement" Claim -- Mr. Rutz's
(c)
final claim is that Discover exhibited bad faith in its "tortious
selective
enforcement"
of
its
trademark
rights
in
the
word
"Discover."
(1)
but
it
Mr. Rutz has stated no legal basis for this claim,
appears
he
attempts
to
state
a
claim
of
malicious
prosecution. To effectively plead such a claim, Mr. Rutz must show
the following:
*
a proceeding was brought or maintained by the defendant
against the plaintiff;
*
the proceeding was terminated in favor of the plaintiff;
*
the defendant lacked probable cause to bring the
proceeding;
*
the defendant brought the proceeding with malice; and
*
the plaintiff suffered damages.
Milton Hambrice, Inc. v. State Farm Fire & Cas. Co., 114 F.3d 722,
724 (8th Cir. 1997).
(2) This claim is discussed in Section Q. of the Second
-10-
Amended Complaint (document #20, pages 80–81) and consists of only
two sentences. In those two sentences, Mr. Rutz alleges only that
"[o]ut of the hundreds of thousands ... of trade marks and domain
names, the selection of Rutz to prosecute is the epitome of Bad
Faith." He states no other facts to support a claim of malicious
prosecution. What he has stated is not sufficient.
The Court, therefore, concludes that the Second and Third
Amended Complaints fail to state a claim for either "Tortious
Selective Enforcement" or malicious prosecution against Discover
upon which relief may be granted -- and Discover's motion to
dismiss (D#27 Motion) will be granted on these allegations.
5.
P#29 Motion -- (Motion To Reconsider) -- Simultaneously
with and as part of the same document as his response to the
Motion to Dismiss (the D#27 Motion), Mr. Rutz filed his Motion to
Reconsider this Court's dismissal of his original and first
Amended Complaints -- the D#29 Motion.
(a)
In this motion, Mr. Rutz insists that the Court
improperly viewed his lawsuit as an appeal of the arbitration
ruling against him. He then dedicates several pages to re-arguing
his previous pleadings.
(b)
While it is undisputed that this lawsuit was filed
in response to the adverse arbitration ruling against Mr. Rutz,
the previous arbitration has in no way affected the Court's
consideration of the claims sought to be asserted in this lawsuit
-11-
-- and Mr. Rutz has alleged no facts which would call that
assertion into question.
(3) Mr. Rutz has simply failed to plead facts sufficient
to support the claims he has attempted to make -- which failure
has necessarily led to dismissal of those claims. His contention
that previous lack of success before the National Arbitration
Forum had some bearing on this outcome is baseless and without
merit.
(4)
Because he has stated no errors of law or fact for
the Court to reconsider, Mr. Rutz's motion for reconsideration
(the P#29 Motion) will be denied.
6.
P#31 Motion (Plaintiff's Motion For Summary Judgment) --
Based on the foregoing, Mr. Rutz's Motion for Summary Judgment
(the P#31 Motion) is obviously without merit and will be denied.
7.
P#32 Motion (Plaintiff's Motion To Amend Complaint by
Naming and Serving Does 6-15) -- Mr. Rutz's latest Motion to Amend
seeks to add ten more defendants to his RICO claims. Those ten
are:
*
American Express;
*
Bank of America;
*
MBNA Corporation;
*
Wells Fargo:
*
Wachovia;
*
Capital One Financial Corporation;
-12-
*
Capital One Bank (USA), N.A.;
*
Capital One, N.A.;
*
J.P. Morgan Chase; and
*
Citigroup, Inc.
These appear to be the remaining ten defendants named in the
Kroll
v. National
previously
noted
Arbitration Forum,
--
Mr.
Rutz
has
Inc.
case
improperly
which
-- as
attempted
to
replicate.
(a)
Whether to grant or deny a plaintiff's motion to
amend his pleading is within the sound discretion of the Court.
Popoalli v. Correctional Med. Servs., 512 F.3d 488, 497 (8th Cir.
2008). The Court should freely grant such a motion when justice so
requires.
Fed.
R.
Civ. P.
15(a)(2).
However,
the
Court may
properly deny the motion when amendment would be futile. Popoalli,
512 F.3d at 497.
(b)
Because the Court has already found that Mr. Rutz
failed to state a RICO claim upon which relief may be granted,
amending his pleadings to add ten more defendants to that claim
would be futile. Therefore, this motion will be denied.
8.
D#33 Motion (Defendant Discover Financial Services'
Motion For Extension of Time to Respond to Plaintiff's Summary
Judgment Motion) -- In light of the Court's summary denial of
Plaintiff's
Motion
for
Summary
Judgment
(the
P#31
Motion),
Discover's motion for an extension of time to respond to the
-13-
summary judgment motion will be denied as moot.
IT IS THEREFORE ORDERED that
*
Defendant Discover Financial Services' Motion to Dismiss
Plaintiff's Second and Third Amended Complaints (document #27) is
hereby granted;
*
plaintiff's Motion to Reconsider Order [26] Granting
Motion to Dismiss for Failure to State a Claim [10] (document #29)
is hereby denied;;
*
plaintiff's Motion for Summary Judgment (document #31)
is hereby denied;
*
plaintiff's Motion to Amend Complaint by Naming and
Serving Does 6–15 (document #32) is hereby denied; and
*
Defendant
Discover
Financial
Services'
Motion
for
Extension of Time to Respond to Plaintiff's Summary Judgment
Motion (document #33) is hereby denied as moot.
A
formal
order
dismissing
this
case
will
be
entered
separately.
IT IS SO ORDERED.
/s/ Jimm Larry Hendren
JIMM LARRY HENDREN
UNITED STATES DISTRICT JUDGE
-14-
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